99TH GENERAL ASSEMBLY
State of Illinois
2015 and 2016
SB1660

 

Introduced 2/20/2015, by Sen. Karen McConnaughay

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 5/211
35 ILCS 10/5-15

    Amends the Economic Development for a Growing Economy Tax Credit Act and the Illinois Income Tax. Authorizes taxpayers to sell, assign, or transfer credits awarded under the Economic Development for a Growing Economy Tax Credit Act. Effective immediately.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

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1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Income Tax Act is amended by
5changing Section 211 as follows:
 
6    (35 ILCS 5/211)
7    Sec. 211. Economic Development for a Growing Economy Tax
8Credit. For tax years beginning on or after January 1, 1999, a
9Taxpayer who has entered into an Agreement under the Economic
10Development for a Growing Economy Tax Credit Act is entitled to
11a credit against the taxes imposed under subsections (a) and
12(b) of Section 201 of this Act in an amount to be determined in
13the Agreement. If the Taxpayer is a partnership or Subchapter S
14corporation, the credit shall be allowed to the partners or
15shareholders in accordance with the determination of income and
16distributive share of income under Sections 702 and 704 and
17subchapter S of the Internal Revenue Code. The Department, in
18cooperation with the Department of Commerce and Economic
19Opportunity, shall prescribe rules to enforce and administer
20the provisions of this Section. This Section is exempt from the
21provisions of Section 250 of this Act.
22    The credit shall be subject to the conditions set forth in
23the Agreement and the following limitations:

 

 

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1        (1) The tax credit shall not exceed the Incremental
2    Income Tax (as defined in Section 5-5 of the Economic
3    Development for a Growing Economy Tax Credit Act) with
4    respect to the project.
5        (2) The amount of the credit allowed during the tax
6    year plus the sum of all amounts allowed in prior years
7    shall not exceed 100% of the aggregate amount expended by
8    the Taxpayer during all prior tax years on approved costs
9    defined by Agreement.
10        (3) The amount of the credit shall be determined on an
11    annual basis. Except as applied in a carryover year
12    pursuant to Section 211(4) of this Act, the credit may not
13    be applied against any State income tax liability in more
14    than 10 taxable years; provided, however, that (i) an
15    eligible business certified by the Department of Commerce
16    and Economic Opportunity under the Corporate Headquarters
17    Relocation Act may not apply the credit against any of its
18    State income tax liability in more than 15 taxable years
19    and (ii) credits allowed to that eligible business are
20    subject to the conditions and requirements set forth in
21    Sections 5-35 and 5-45 of the Economic Development for a
22    Growing Economy Tax Credit Act.
23        (4) The credit may not exceed the amount of taxes
24    imposed pursuant to subsections (a) and (b) of Section 201
25    of this Act. Any credit that is unused in the year the
26    credit is computed may be carried forward and applied to

 

 

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1    the tax liability of the 5 taxable years following the
2    excess credit year. The credit shall be applied to the
3    earliest year for which there is a tax liability. If there
4    are credits from more than one tax year that are available
5    to offset a liability, the earlier credit shall be applied
6    first.
7        (5) No credit shall be allowed with respect to any
8    Agreement for any taxable year ending after the
9    Noncompliance Date. Upon receiving notification by the
10    Department of Commerce and Economic Opportunity of the
11    noncompliance of a Taxpayer with an Agreement, the
12    Department shall notify the Taxpayer that no credit is
13    allowed with respect to that Agreement for any taxable year
14    ending after the Noncompliance Date, as stated in such
15    notification. If any credit has been allowed with respect
16    to an Agreement for a taxable year ending after the
17    Noncompliance Date for that Agreement, any refund paid to
18    the Taxpayer for that taxable year shall, to the extent of
19    that credit allowed, be an erroneous refund within the
20    meaning of Section 912 of this Act.
21        (5.5) A sale, assignment, or transfer of the tax credit
22    award may be made by the taxpayer in accordance with rules
23    adopted by the Department of Commerce and Economic
24    Opportunity.
25        (6) For purposes of this Section, the terms
26    "Agreement", "Incremental Income Tax", and "Noncompliance

 

 

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1    Date" have the same meaning as when used in the Economic
2    Development for a Growing Economy Tax Credit Act.
3(Source: P.A. 94-793, eff. 5-19-06.)
 
4    Section 10. The Economic Development for a Growing Economy
5Tax Credit Act is amended by changing Section 5-15 as follows:
 
6    (35 ILCS 10/5-15)
7    Sec. 5-15. Tax Credit Awards. Subject to the conditions set
8forth in this Act, a Taxpayer is entitled to a Credit against
9or, as described in subsection (g) of this Section, a payment
10towards taxes imposed pursuant to subsections (a) and (b) of
11Section 201 of the Illinois Income Tax Act that may be imposed
12on the Taxpayer for a taxable year beginning on or after
13January 1, 1999, if the Taxpayer is awarded a Credit by the
14Department under this Act for that taxable year.
15    (a) The Department shall make Credit awards under this Act
16to foster job creation and retention in Illinois.
17    (b) A person that proposes a project to create new jobs in
18Illinois must enter into an Agreement with the Department for
19the Credit under this Act.
20    (c) The Credit shall be claimed for the taxable years
21specified in the Agreement.
22    (d) The Credit shall not exceed the Incremental Income Tax
23attributable to the project that is the subject of the
24Agreement.

 

 

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1    (e) Nothing herein shall prohibit a Tax Credit Award to an
2Applicant that uses a PEO if all other award criteria are
3satisfied.
4    (f) In lieu of the Credit allowed under this Act against
5the taxes imposed pursuant to subsections (a) and (b) of
6Section 201 of the Illinois Income Tax Act for any taxable year
7ending on or after December 31, 2009, the Taxpayer may elect to
8claim the Credit against its obligation to pay over withholding
9under Section 704A of the Illinois Income Tax Act.
10        (1) The election under this subsection (f) may be made
11    only by a Taxpayer that (i) is primarily engaged in one of
12    the following business activities: water purification and
13    treatment, motor vehicle metal stamping, automobile
14    manufacturing, automobile and light duty motor vehicle
15    manufacturing, motor vehicle manufacturing, light truck
16    and utility vehicle manufacturing, heavy duty truck
17    manufacturing, motor vehicle body manufacturing, cable
18    television infrastructure design or manufacturing, or
19    wireless telecommunication or computing terminal device
20    design or manufacturing for use on public networks and (ii)
21    meets the following criteria:
22            (A) the Taxpayer (i) had an Illinois net loss or an
23        Illinois net loss deduction under Section 207 of the
24        Illinois Income Tax Act for the taxable year in which
25        the Credit is awarded, (ii) employed a minimum of 1,000
26        full-time employees in this State during the taxable

 

 

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1        year in which the Credit is awarded, (iii) has an
2        Agreement under this Act on December 14, 2009 (the
3        effective date of Public Act 96-834), and (iv) is in
4        compliance with all provisions of that Agreement;
5            (B) the Taxpayer (i) had an Illinois net loss or an
6        Illinois net loss deduction under Section 207 of the
7        Illinois Income Tax Act for the taxable year in which
8        the Credit is awarded, (ii) employed a minimum of 1,000
9        full-time employees in this State during the taxable
10        year in which the Credit is awarded, and (iii) has
11        applied for an Agreement within 365 days after December
12        14, 2009 (the effective date of Public Act 96-834);
13            (C) the Taxpayer (i) had an Illinois net operating
14        loss carryforward under Section 207 of the Illinois
15        Income Tax Act in a taxable year ending during calendar
16        year 2008, (ii) has applied for an Agreement within 150
17        days after the effective date of this amendatory Act of
18        the 96th General Assembly, (iii) creates at least 400
19        new jobs in Illinois, (iv) retains at least 2,000 jobs
20        in Illinois that would have been at risk of relocation
21        out of Illinois over a 10-year period, and (v) makes a
22        capital investment of at least $75,000,000;
23            (D) the Taxpayer (i) had an Illinois net operating
24        loss carryforward under Section 207 of the Illinois
25        Income Tax Act in a taxable year ending during calendar
26        year 2009, (ii) has applied for an Agreement within 150

 

 

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1        days after the effective date of this amendatory Act of
2        the 96th General Assembly, (iii) creates at least 150
3        new jobs, (iv) retains at least 1,000 jobs in Illinois
4        that would have been at risk of relocation out of
5        Illinois over a 10-year period, and (v) makes a capital
6        investment of at least $57,000,000; or
7            (E) the Taxpayer (i) employed at least 2,500
8        full-time employees in the State during the year in
9        which the Credit is awarded, (ii) commits to make at
10        least $500,000,000 in combined capital improvements
11        and project costs under the Agreement, (iii) applies
12        for an Agreement between January 1, 2011 and June 30,
13        2011, (iv) executes an Agreement for the Credit during
14        calendar year 2011, and (v) was incorporated no more
15        than 5 years before the filing of an application for an
16        Agreement.
17        (1.5) The election under this subsection (f) may also
18    be made by a Taxpayer for any Credit awarded pursuant to an
19    agreement that was executed between January 1, 2011 and
20    June 30, 2011, if the Taxpayer (i) is primarily engaged in
21    the manufacture of inner tubes or tires, or both, from
22    natural and synthetic rubber, (ii) employs a minimum of
23    2,400 full-time employees in Illinois at the time of
24    application, (iii) creates at least 350 full-time jobs and
25    retains at least 250 full-time jobs in Illinois that would
26    have been at risk of being created or retained outside of

 

 

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1    Illinois, and (iv) makes a capital investment of at least
2    $200,000,000 at the project location.
3        (1.6) The election under this subsection (f) may also
4    be made by a Taxpayer for any Credit awarded pursuant to an
5    agreement that was executed within 150 days after the
6    effective date of this amendatory Act of the 97th General
7    Assembly, if the Taxpayer (i) is primarily engaged in the
8    operation of a discount department store, (ii) maintains
9    its corporate headquarters in Illinois, (iii) employs a
10    minimum of 4,250 full-time employees at its corporate
11    headquarters in Illinois at the time of application, (iv)
12    retains at least 4,250 full-time jobs in Illinois that
13    would have been at risk of being relocated outside of
14    Illinois, (v) had a minimum of $40,000,000,000 in total
15    revenue in 2010, and (vi) makes a capital investment of at
16    least $300,000,000 at the project location.
17        (1.7) Notwithstanding any other provision of law, the
18    election under this subsection (f) may also be made by a
19    Taxpayer for any Credit awarded pursuant to an agreement
20    that was executed or applied for on or after July 1, 2011
21    and on or before March 31, 2012, if the Taxpayer is
22    primarily engaged in the manufacture of original and
23    aftermarket filtration parts and products for automobiles,
24    motor vehicles, light duty motor vehicles, light trucks and
25    utility vehicles, and heavy duty trucks, (ii) employs a
26    minimum of 1,000 full-time employees in Illinois at the

 

 

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1    time of application, (iii) creates at least 250 full-time
2    jobs in Illinois, (iv) relocates its corporate
3    headquarters to Illinois from another state, and (v) makes
4    a capital investment of at least $4,000,000 at the project
5    location.
6        (2) An election under this subsection shall allow the
7    credit to be taken against payments otherwise due under
8    Section 704A of the Illinois Income Tax Act during the
9    first calendar year beginning after the end of the taxable
10    year in which the credit is awarded under this Act.
11        (3) The election shall be made in the form and manner
12    required by the Illinois Department of Revenue and, once
13    made, shall be irrevocable.
14        (4) If a Taxpayer who meets the requirements of
15    subparagraph (A) of paragraph (1) of this subsection (f)
16    elects to claim the Credit against its withholdings as
17    provided in this subsection (f), then, on and after the
18    date of the election, the terms of the Agreement between
19    the Taxpayer and the Department may not be further amended
20    during the term of the Agreement.
21    (g) A pass-through entity that has been awarded a credit
22under this Act, its shareholders, or its partners may treat
23some or all of the credit awarded pursuant to this Act as a tax
24payment for purposes of the Illinois Income Tax Act. The term
25"tax payment" means a payment as described in Article 6 or
26Article 8 of the Illinois Income Tax Act or a composite payment

 

 

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1made by a pass-through entity on behalf of any of its
2shareholders or partners to satisfy such shareholders' or
3partners' taxes imposed pursuant to subsections (a) and (b) of
4Section 201 of the Illinois Income Tax Act. In no event shall
5the amount of the award credited pursuant to this Act exceed
6the Illinois income tax liability of the pass-through entity or
7its shareholders or partners for the taxable year.
8    (h) Effective July 1, 2015, any tax credits awarded under
9this Act and not previously claimed by a taxpayer against its
10income tax liability under Section 201 of the Illinois Income
11Tax Act may be sold, assigned, or transferred, in whole or in
12part, to another Illinois taxpayer subject to all of the
13following conditions:
14        (1) A taxpayer awarded an income tax credit under this
15    Act may make only a single sale, assignment, or transfer of
16    the tax credit earned in a taxable year; however, the
17    credit may be sold, assigned, or transferred to one or more
18    transferees.
19        (2) The tax credit earned by the transferor may be
20    transferred before the due date, including extensions, of
21    the Illinois income tax return of the transferor. The
22    amount of the credit transferred to the transferee or
23    transferees may not exceed the amount of the credit earned
24    by the transferor in the transferor's taxable year.
25        (3) Written notification of the transfer or sale of
26    credits awarded under this Act shall be submitted to the

 

 

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1    Department of Commerce and Economic Opportunity and the
2    Department of Revenue within 30 days after the sale,
3    assignment, or transfer. The Department of Revenue shall
4    provide by rule the information required to be provided in
5    such written notification.
6        (4) The transfer or sale of tax credits under this
7    subsection does not extend the time during which those tax
8    credits can be used. The carry-forward period for a tax
9    credit that is transferred or sold shall begin on the date
10    on which the tax credit was originally earned.
11        (5) A transferee shall have only those rights to claim
12    and use the tax credit that were available to the taxpayer
13    that earned the credit, except that credits sold or
14    transferred may not be used against a transferee's
15    withholding tax liability.
16        (6) If the taxpayer earning the credit fails to comply
17    with the terms and requirements of the Agreement, and,
18    pursuant to the provisions of Section 5-65 of this Act,
19    notice is provided to the Department of Revenue of the
20    taxpayer's non-compliance, the Department shall hold the
21    transferor liable for any tax, penalty, or interest due as
22    a result of non-compliance with the Agreement.
23(Source: P.A. 96-834, eff. 12-14-09; 96-836, eff. 12-16-09;
2496-905, eff. 6-4-10; 96-1000, eff. 7-2-10; 96-1534, eff.
253-4-11; 97-2, eff. 5-6-11; 97-636, eff. 6-1-12.)
 
26    Section 99. Effective date. This Act takes effect upon

 

 

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1becoming law.